Gold is bottoming, bullish above $1200

Gold prices are likely bottoming after having retraced a big chunk of the January rally this month. Looking at the XAUUSD chart over the past two and a half years, prices have started to bounce off an old bearish trend line that was broke through at the start of the year. There's also a bullish trend line coming in at the $1190 level. Technicals suggest that a bounce in gold prices could target at least $1230 in the beginning of March, but I think the market could work its way back up to $1250 so long as the dollar continues to consolidate. After Yellen's testimonies this week, I find that the greenback faces downside risk as economists and traders are likely to push back their aggressive forecasts for a rate hike before September. A bearish reversal in the dollar market would bolster the upside potential for gold in March, and that could allow it to rally all the way back up to $1300. Note however that we'd need to see a break above the January highs before being able to expect a true gold rally over the long term.